Here’s Bob Higgs on the delusion of a win-win trade war. A slice:
The foregoing considerations are only a few of the many that weigh against the initiation and continuation of a trade war. Trump says such wars are easy to win. In this regard, he apparently doesn’t even understand what winning means. The supposition that such a war can be won is a delusion. A trade war may serve Trump’s political ambitions by appealing to supporters ignorant of economics and easily bamboozled by anything wrapped in the flag, but the idea of a win-win trade war is the height of folly so far as economic rationality is concerned—not to mention its further suppression of economic liberties already being crushed by taxes and regulations. In fact, the only way to win a trade war is not to fight one.
Yet let’s nevertheless hope that Scott Sumner is correct that Peter Navarro is indeed losing.
Warren Meyer is unimpressed with Trump’s new trade deal with the E.U. A slice:
This is basically a big zero. Even beyond the fact that the agreement avoids most of the major trade categories, the act of negotiating towards lower tariffs, lower non-tariff barriers, and reconciling conflicting regulator standards has been done before — its called NAFTA and the TPP, both of which Trump has sh*t on. Sure, they can have flaws (especially the TPP), but these compromises are the only way these trade deals get made, as country leaders each are in thrall to their own influential crony industry. The US’s own high tariffs on SUV imports is a great example. This is all not to mention the time — TPP negotiations took 8 years — through which we consumers apparently will still suffer under Trump’s tariffs.
Jacob Sullum further exposes Trump’s astonishing ignorance about trade. A slice:
“If we didn’t trade,” Trump argues, “we’d save a hell of a lot of money.” But that does not mean we’d be better off, since we would not have all the things we buy with our money, which we clearly value more than the money itself, since no one forces us to exchange one for the other. The analysis is the same whether or not the people who sell us things happen to be located in the United States.
“Without trade, we could have piles of money,” Cato Institute trade specialist Scott Lincicome concedes in an interview with The New York Times. “But we’d have no food, clothing, housing, etc. So the money would be worthless, unless you swam in it like Scrooge McDuck or something.”
The president, despite his Wharton degree and business career, frequently seems baffled by this concept, prompting corrective analogies from people with a firmer grasp of economics. “When you’re almost 800 Billion Dollars a year down on Trade, you can’t lose a Trade War!” Trump asserted on Twitter last month. “I’m way down on trade with restaurants, grocery stores, malls, and movie theaters,” Rep. Justin Amash (R-Mich.) replied. “I keep buying from them, but they never buy from me. I must be getting ripped off, right?”
What’s even weirder about Corbyn’s economics is his urging that things be built in Britain rather than imported. It’s the exact reverse of how economists understand trade. Imports are a benefit to the British economy; exports are what we give up in order to have them. If Britain aimed for self-sufficiency in the production of food, machine tools and tablet computers, we’d forgo the benefits of specialisation. The division of labour internationally generally boosts the real incomes of both parties.
My intrepid Mercatus Center colleague Veronique de Rugy argues that a carbon tax remains a bad idea.
